September 3rd, 2009 by EvanFalchukJD in Better Health Network, Health Policy
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Bad news in the paper today: health care costs are expected to rise another 10.5% next year. It’s a serious problem that affects businesses and families across the country.
But the headlines miss something important: the rate of increase has been steadily slowing.
Are we already bending the health care cost curve?
Here is a chart of the rate of increase in health premiums for a PPO plan beneficiary from 2002-2009 (all data are from today’s Aon press release):
The data for other plan types are similar. What’s happening?
Aon’s Chief Medical Officer Paul Berger says it’s because of the variety of measures employers have taken over the last several years to implement programs to improve their employees’ health. He emphasizes there is still much more to be done.
He has a point. It’s something we have seen in our survey of major employers, and in the work that leading employers like EMC and Genzyme are doing. It’s what my company does, too. Employers are getting increasingly sophisticated at understanding what drives their health care expenses and are developing increasingly effective ways at addressing them.
So, yes, of course, we need reform of our health care system, and of course rising health care costs are a serious concern. But American employers are doing something about these problems all on their own.
*This blog post was originally published at See First Blog*
August 24th, 2009 by EvanFalchukJD in Better Health Network, Health Policy
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There has been a lot of talk about the way in which a public health insurer would compete against private ones. As the President put it recently:
People say, well, how can a private company compete against the government? And my answer is that if the private insurance companies are providing a good bargain, and if the public option has to be self-sustaining — meaning taxpayers aren’t subsidizing it, but it has to run on charging premiums and providing good services and a good network of doctors, just like any other private insurer would do — then I think private insurers should be able to compete. They do it all the time.
He makes a good point. But we don’t have to talk about this in theory – we can look at existing state insurance programs to see how they operate.
In states prone to natural disasters like hurricanes, the market for private insurance has become increasingly uncompetitive. Several state governments have responded by setting up public insurance programs to sell coverage to property owners in their states. They operate something like private insurance companies – collecting premiums, maintaining reserves, and, importantly, buying reinsurance in the event of a catastrophe that exceeds what they can pay for themselves.
The New York Times reports that a number of the state insurers are thinking of doing something that a private insurer would likely never do: dropping their reinsurance coverage. It could save hundreds of millions of dollars a year. But it would expose them to billions of dollars in risk – that they likely would be unable to pay. The Times calls it “running naked through storm risks.”
Why can they do this?
I suspect that in the event of a bad hurricane that depleted their reserves, these insurers believe they can turn to the state or federal government to cover their losses. They are acting as if they already have a sort of “free” reinsurance from the government. Or, to use a modern expression, they are assuming they will get a bail out if something bad happens.
What it means is that these companies aren’t running anything like a private insurer. By not accounting for the cost of a catastrophe, they aren’t dealing with the real insurance risk they are taking. As long as a disaster doesn’t happen they save money. But when (not if) a major hurricane hits, they will be swept away in the storm, leaving the state and federal government – and the rest of us – with the bill.
“It’s typical of governments today to not be willing to make the hard decisions that are necessary to face up to the true risks and the true costs of the policies that they’ve undertaken,” said Robert Hartwig, president of the Insurance Information Institute, an industry group.
The Times says there are some efforts underway to formalize this sort of “implicit guarantee” from the government. That might be a step in the right direction if it forces everyone to grapple with the extent of this risk.
But what we see with these kinds of insurers is one of the important ways in which public insurers really aren’t the same as private ones.
*This blog post was originally published at See First Blog*
August 20th, 2009 by EvanFalchukJD in Better Health Network, Health Policy, Opinion
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As I’ve blogged about before (here, here, here and here), a big reason reform is going so badly is this: Reformers don’t understand how people react when you try to make changes to their health benefits.
Companies across America have been making changes to health benefits for years.
Reformers seem to have ignored the lessons of their experience.
Take one of the hottest trends in benefits – evidence-based plan design.
These are plans that offer better coverage if care is done based on evidence-based guidelines. It’s similar to the “comparative effectiveness” ideas that are so important to some of the reform proposals.
The National Business Group on Health published a study of challenges companies face implementing these plans. The study tried to understand how employees feel about these kinds of changes to their benefits.
Here are three of the major findings.
1. Most employees believe that more care is better care. Employees tend to view the idea that sometimes less care is the right care as “both unfamiliar and counter-intuitive.” Quality care is viewed as “trying as many things as possible, including new or alternative treatments.” In other words, you get what you pay for, and efforts to pay less are interpreted as efforts to give less.
2. Employees are suspicious of their employer’s motives. Employees tend to assume that their employer just wants to save money, and doesn’t really care about the quality of care they get. They suspect that moving to an evidence-based plan design is really just the first step toward more severe restrictions on choice and access.
3. Employees worry that employers are overstepping their bounds. Employees report worries that their employer wants to influence treatment decisions. They feel strongly that those decisions should be made by them and their doctor.
Reformers made a big mistake by focusing so intently on health care cost savings as the “single most important fiscal issue we face as a country.” It’s almost as if they decided to pick a way to promote reform that would create the most resistance.
Spend less on health care? That was almost certain to be understood as meaning you want to deny me or my loved ones the care we deserve. A panel of government experts deciding what treatments are effective? Who are they to tell me and my doctor what’s right? And don’t you dare tell me the reason you want to do all this is to make sure I get the best care.
Reformers have stumbled into a trap of their own making. Based on the continuing effort to demonize those who raise objections, they still don’t see it.
This is why reform is going so badly.
*This blog post was originally published at See First Blog*
August 10th, 2009 by EvanFalchukJD in Better Health Network, Health Policy
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If you were hoping for a thoughtful discussion on the reform of our health care system, I have bad, bad news.
It turns out that health insurers are “villians.” Public anger over the massive, mostly unread, reform bills is “manufactured,” and anxiety created by the expectation of unknown changes to people’s most valued benefits is the result of disinformation and “fishy” stories.
It’s like an employee benefits roll-out gone horribly awry.
The protests and disastrous town halls look to me just like the kinds of angry protests that happen all the time when employers make important changes to a benefit plan and the employees either don’t understand them or don’t agree.
Blaming the people who don’t follow what you’re doing and why is a big mistake. Sure, there is politics. But health care is a serious, emotional issue, and it should be no surprise that people react badly when they think something to do with it may be taken away.
Dreaming up ideas of how health care ought to work is relatively easy. But figuring out how to implement it is hard, and there are no short cuts. The people who actually run benefits plans – employers, benefits consultants, HR professionals – can tell you: there is no replacement for communication, engagement and respect for opposing views.
The strategy of demonizing those who aren’t on board is a mistake, and is as likely to set back the cause of reform as it is to further inflame an already volatile audience.
*This blog post was originally published at See First Blog*
August 3rd, 2009 by EvanFalchukJD in Better Health Network, Health Policy
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I thought everyone knew the major goal of health care reform is to control spending.
Then why are Democratic leaders proposing changes that would outlaw some of the most successful cost-savings programs in the country?
Today’s The Hill reports on the new strategy to attack insurance companies as “villains.” No doubt, health insurers have a bad reputation and have done plenty to earn it. As the Hill reports, the message is going to be that the reform plan will lead to “capping what [insurers] can force you to pay in out-of-pocket expenses, co-pays and deductibles.”
But for at least half of Americans – those who work for large and mid-sized companies and their families – their “insurer” is actually their employer. And many of these employers have been using out-of-pocket expenses, co-pays and deductibles to improve employee health, and reduce the cost of care. They are creating strong wellness programs and creating financial rewards and penalties, all based on employee participation.
As I wrote in April:
Companies like Safeway, Wal-Mart, Michelin, General Mills, Marriott and so many others have implemented programs to create a “culture” of wellness among their employees and their families. Leaders at these companies constantly talk about living healthy lifestyles, and are paying to make it happen. At Michelin, employees get a cash reward for getting a biometric screening and for participating in company-sponsored health improvement programs. It even started work-site exercise programs, including yoga (although it found that with a workforce that was 82% male it had to call its yoga classes “strengthening and conditioning”).
General Mills published wellness statistics about its different plants and found that the workers in each one competed with the others to get the best scores for BMI and other important health metrics. Marriott found that by eliminating co-pays on drugs for certain chronic diseases, more employees followed doctors’ orders to take them, and although Mariott’s drug costs went up, overall health expenses went down. Abbott Labs brings in motivational speakers and set up weigh-in kiosks in its offices that took pictures of employees as they got healthier so they could see the difference. All of these companies reported on enthusiastic participation, and a sense among employees that their company cared about their well-being.
Safeway has taken this idea even further, and redesigned its entire benefits plan around this concept. Employees who live unhealthy lifestyles and refuse to participate in wellness programs pay more for their health insurance — just like a bad driver pays more for auto insurance. Safeway did this in a highly positive and motivational way, making available a wide array of free services to help employees be more healthy and enjoy lower health premiums. The results have been dramatic: Steve Burd, Safeway’s CEO reported at the WHCC that Safeway’s health costs have been flat since 2005.
This Safeway model – creating both soft and hard incentives for employee health – is one of the fastest growing trends in plan design. The idea is to give employees control over their own health care, including financial responsibility. When this happens, employees live healthier, look for value in their health care spending, and overall costs are lower.
And yet the statements from the Congressional leadership suggest they want to severely limit these kinds of innovations.
It may be good politics to demonize the insurers, but we should realize that “insurers” aren’t exactly who we think they are. Health reform that stifles the innovation that’s working at America’s best companies is no reform at all.
*This blog post was originally published at See First Blog*
